Call it the “Inside Job” effect.
Columbia Business School, which came in for a critical drubbing by the Academy Award-winning documentary “Inside Job,” has approved more stringent rules for disclosing potential conflicts of interest among faculty.
The changes, approved last week by B-school professors, come after the provocative documentary brought embarrassing attention to academics who profit from unreported consulting and directorship deals with companies and organizations and then weigh in as “objective” observers on key policy issues in economics and financial regulation. The documentary was especially discomforting to Columbia Business School Dean R. Glenn Hubbard and Columbia B-school professor Frederic S. Mishkin.
Both granted the filmmaker Charles Ferguson on-air interviews that did not show either of them in the best light. Hubbard, who among other things is a MetLife director, came off as imperial and arrogant when asked about his consulting arrangements. Mishkin, who advises investment firms, was revealed to have written a positive white paper on Iceland not long before the country went bankrupt. It was paid for by Iceland’s Chamber of Commerce. His often-befuddled responses to questions made him appear, in the words of a rival dean, “a deer caught in the headlights” (see clip from movie below).
The documentary noted that Mishkin did not disclose publicly that in 2006, he was paid over $100,000 by the Iceland Chamber of Commerce to co-author a paper in which he praised the stability of Iceland’s economy—two years before it collapsed. It also criticizes Hubbard for not disclosing that he is paid $250,000 per year to serve on the board of the insurance giant MetLife.
The film sparked a debate about conflict of interest policies at Columbia, prompting the administration to reexamine the issue and leading the campus newspaper, The Columbia Spectator, to write a series of stories on the university’s conflict of interest rules. Among other things, the newspaper reported that some peer institutions have more comprehensive disclosure policies than Columbia’s. These schools include the University of Chicago, the University of Pennsylvania, Northwestern University, and Stanford University. Those schools require faculty members to disclose their consulting activities—including those unrelated to academic research—on annual, confidential forms.
Under Columbia’s new policy, Business School professors will be required to publicly disclose all outside activities—including consulting—that create or appear to create conflicts of interest. The new policy requires B-school professors to publish up-to-date curricula vitae, including a section on outside activities, on their Columbia webpages. They will be mandated to list all outside organizations to which they have provided paid or unpaid services during the past five years, including but not limited to consulting work, research, membership on a company’s board, and expert witness testimony. They will also have to describe the nature of those services.
The policy resolution approved by the faculty acknowledges that the B-school’s reputation has been called into question, noting that “increasing transparency about research and real or apparent conflict of interests and commitments helps Columbia Business School strengthen its reputation….When faculty members speak, write, or provide testimony, the public should understand their sources of compensation outside the University that might indicate any possible conflict of interests.”
According to the policy, the B-school’s dean’s office will monitor and enforce compliance with the disclosure requirement, and faculty members will be expected to update their CVs at least every six months. Faculty members who do not follow these rules will be subject to sanctions, although the policy does not specify what these sanctions might be.