I frequently disagree with Nell Minow, but when she's right, she's right, and she's exactly right about the need for better disclosure from academics with conflicts of interest:
Academics who study business love to talk about the power of incentives and the importance of full information to enable the most effective and efficient decisions. Unless it applies to them.
As David Kocieniewski reported in the New York Times on December 27, 2013, "academic experts" who testify and make filings in favor of business-friendly regulations and rulings often fail to disclose the corporate sources of funding for their research. While they appear to represent the ivory tower virtues of scholarly integrity, with fidelity to nothing but the truth, they are in fact advocates who are paid to take the positions they promote.
[M]ajor players on Wall Street and elsewhere have been aggressive in underwriting and promoting academic work... part of a sweeping campaign to beat back regulation and shape policies that affect the prices that people around the world pay for essentials like food, fuel and cotton.
Inside Job, the superb documentary about the financial meltdown, has a devastating scene with Glenn Hubbard, the Dean of Columbia's Graduate School of Business, refusing to discuss the payments he receives from the financial services industry. As one commenter on the Times article noted, "Nothing is funnier than watching people who study economics declare that money can't possibly have any influence on their work."
... academics are influential, because they are perceived as uniquely able to evaluate all sides with equal rigor, free from bias or obligation. If that is to continue, they must be completely transparent about their sources of funding. Before they raise the issue of conflicts of interest faced by others, they should disclose their own.
As Justice Brandeis famously observed, sunlight is the best disinfectant and electric light is the best policeman. Hence, I wrote back in April 2013 that:
Professing for pay has become a serious problem, with many academics--including a lot of law professors--making huge bucks serving as expert witnesses and affiants in both judicial and legislative proceedings. As I've noted before:
I quit doing consulting and expert witness work six or seven years ago precisely because I too had "an ill-formed intuition" that there was something sleazy about getting paid to put my academic reputation on the line for the specific benefit of private actors. All too often, I felt my name and expertise were being used by people engaged in some form of private rent seeking. Today, my income comes pretty much exclusively from salary and book royalties. So if I take a position (here or elsewhere) it's because I believe it, not because I'm getting paid to say it. That way, the only reason there will ever be "no doubt about ... [my] conclusions" is that a long-time reader will have been able to guess them based on the legal and political positions I've taken in the past. And it will never be "fair to assume that" I am "very well placed to make a lot of money" by having taken that position.
At a bare minimum, the conflict of interest inherent in these situations requires disclosure to one's university employer and to the readers of one's scholarship. In business law, moreover, disclosure of a conflict of interest is not enough. An agent with a conflict of interest must not only disclose the conflict, the agent must get approval from the employer before undertaking the conflicting activity. In my book, that means that before an academic gets paid to "testify in Congress, appear on television news, testify in a legal case or regulatory proceeding, give a speech, or write an opinion article," the university ought to make a determination whether the activity in question passes ethical muster.
But just because Minow's right about this issue and has identified some potential bad actors, doesn't mean she's right about proxy advisory services or shareholder activism. Take it from this uncompensated academic, she isn't.
BTW, for an even longer treatment of the issues herein, see my post The murky ethical status of scholarship that benefits private parties who may or may not be paying for it, which I partially excerpted above.