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“It was a big topic of conversation around here,” says Ingo Walter, vice-dean of faculty at NYU Stern.
Michael Gibbons, Wharton’s deputy dean, says: “I think all of us became much more sensitive about this when we saw the movie.”
The Oscar-winning documentary Inside Job ruffled many feathers with its analysis of the financial crisis – not least at US business schools.
The film criticised several leading professors for failing to disclose outside economic relationships. Consequently, in recent months, many schools have been reviewing their disclosure policies, hoping to avoid further embarrassment. Universities already have internal disclosure policies in place but, alarmed by the film and other criticism, some schools have introduced their own changes.
Columbia has voted through a code requiring disclosure of “outside activities” on faculty staff’s CVs, including work as a consultant, speaker, or board member. The CV must cover at least five years and be on the school website. The rules come on top of a separate university policy, updated in mid-2009, requiring disclosure of outside activities in public writings, talks and reports, including those only loosely related to an academic’s main research.
Gita Johar, Columbia’s senior vice-dean, says the school realised after the financial crisis that business school professors were giving more public statements. “It’s important the public understands where they are coming from,” she adds.
MIT updated its policy three years ago, requiring reporting of “all outside compensated activities”. Robert Freund, who recently stepped down as the Sloan School’s deputy dean for faculty, says one reason for the change is that faculty staff now have many more commercial interests.
“The internet has enabled people to start companies so easily. Twenty years ago, if you worked in the biology or chemistry department, it wasn’t an entrepreneurial hotbed. Now it is.” But he argues that it is up to individuals what they disclose in public, not the university.
Prof Gibbons takes a similar position. “Frankly, if a faculty member fails to be transparent, they are taking on their own liability and ultimately they will pay a price for that. It’s where the school’s reputation is harmed that concerns me.” The film was the main reason Wharton last year reissued its rules on conflicts of interest, he adds.
Prof Walter estimates that 80 per cent of faculty members disclose outside relationships on their CVs or websites, although NYU Stern does not require it. “This is a business school, so we encourage practitioner-related activity,” he says. “Most of it is self-disclosed and we don’t have any plans to mandate such disclosure.”
Chicago Booth recently introduced a policy whereby faculty staff must disclose within a publication that they have been paid for it.
“Our initial thought was that most faculty were good enough scholars that we wouldn’t need to tell them what to do,” says Douglas Diamond, professor of finance at Chicago. “But given that people at other schools had done some things that we thought it would be obvious they shouldn’t do, we came up with some bright lines [guidelines] that everyone needs to do.”
Chicago does not require its faculty members to disclose all outside financial interests, only those related to particular work. Harvard Business School and Yale School of Management are also reviewing their policies.
Other organisations have also tightened guidelines. In January the American Economic Association, publisher of the American Economic Review, bowed to demand from its members and extended its principles on disclosure.
Changes include urging members to declare potential conflicts of interest when appearing before legislative committees and when appearing in the media. However, several economists have noted that the AEA’s powers are limited and reforms would be better made by economists’ university employers.
But business school representatives argue that industry ties are essential for high-quality academic work.
“We want faculty to know what’s going on in the real world,” says Prof Gibbons. “A lot of time they do that by establishing relationships with companies where they learn something and they can bring that knowledge to the classroom.”
Prof Johar agrees. Many organisations would be poorer if academics were shut away, she says. “The world relies on expertise and it’s problematic if it can’t have that.”
This article has been altered since its original publication