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Prodded by Inside Job, the Oscar-winning documentary that exposed ties between financial firms and academia, Columbia University is tightening disclosure rules for faculty who advise Wall Street and other industries. Members of the Faculty of Arts & Sciences will have to post their outside professional activities online and inform deans about their time commitments outside the university, says Michael H. Riordan, chairman of the economics department. The new rules may go into effect as early as October. The university’s law and business schools adopted similar guidelines in April and May.
Columbia first adopted university-wide ethics policies in 2009 that required all university faculty to disclose in publications if they have financial ties to firms or individuals that relate to their research. Professors say the 2010 film, which examines the U.S. financial crisis, led them to look at how the rules could be sharpened. “Inside Job has brought the subject to the fore,” Riordan says. “I don’t think it uncovered a serious problem in the profession, but to the extent it has prompted a debate and caused people to think more carefully, that’s all for the good.”
The film asserts that Columbia finance professor Frederic Mishkin wrote a positive paper about Iceland’s economy in 2006 after receiving $124,000 from that country’s chamber of commerce. Mishkin didn’t disclose the payment in the paper, according to the film. In 2008, Iceland’s banking industry collapsed, defaulting on $85 billion.
Under the 2009 university rules, Mishkin would have had to reveal that financial connection in the paper, says Gita Johar, a business school dean. The new business school rules taking effect this year would also require him to post them in his online résumé. Mishkin didn’t respond to a request for comment.
Inside Job also depicted Columbia Business School Dean R. Glenn Hubbard, a former White House economic adviser under George W. Bush, getting angry when asked about his consulting clients. The film noted that he was paid $250,000 annually to serve on the board of MetLife (MET) and consulted for other financial firms. Hubbard says he has always disclosed his outside activities and sources of income.
Johar says that “disclaimers and disclosures” usually aren’t included when “faculty are quoted in the press” about their research. Posting outside interests online allows the public to make their own judgments about professors’ biases, she says. While Columbia Business School’s rules weren’t motivated solely by the film, the movie made their adoption more urgent, she says: “The financial crisis and Inside Job were definitely in the background and made the issue more salient.”
Professors at Harvard University and Harvard Business School were also criticized in Inside Job. Harvard adopted a university-wide disclosure policy in 2010, and its individual schools will draft specific guidelines for their professors by the end of the academic year, says B.D. Colen, a spokesman.
Inside Job director Charles Ferguson says Columbia should require professors to mention their financial connections when they’re before Congress or governmental agencies and should bar professors from accepting pay for their testimony. “The new policies don’t go far enough,” Ferguson says. “But they are a step forward.”
The bottom line: New rules at Columbia would force professors to be more forthcoming about industry ties that might influence their research.