An Open Letter to Corporate Governance Scholars

Should governance researchers be required to disclose the sources of their funding?

Economists do.  Consider this resolution passed by the Stanford Economics Department

"It is expected that all members of the Stanford Economics Department will publicly disclose any financial or other significant interest that may be perceived to affect the conduct of their research. If a reasonable person would infer that a faculty member’s research conclusions or opinions might be biased by his or her financial or other interests, it is appropriate that the faculty member reveal those interests. Such interests, even if not related to the funding of the research, should be disclosed when appropriate in working papers and publications along with other acknowledgments of financial support and assistance from editors, reviewers, colleagues and seminar participants...."

My open letter published in the January edition of the International Corporate Governance Society newsletter calls on the society to consider a code of ethics for its Members.

The ICGS was founded in 2014 with a mission:

to provide a forum for corporate governance scholars throughout the world to interact with each other so that they can produce rigorous and relevant research, teaching and consulting that enhances corporate governance practices and systems within the global economy.

Though not a governance scholar, I joined up and attended their second annual conference in Boston in September last year.    My open letter follows a brief discussion with ICGS President, Bill Judge, during which I questioned the need for a code of ethics for corporate governance scholars.   You can learn more about the ICGS here.

The Ethics of Corporate Governance Scholarship: Does the ICGS Need a Code of Ethics?

In recent years, the integrity of knowledge produced by our universities and the credibility of the scholars who create it has been the source of much debate.    At issue is whether industry influence is compromising the ethics of scholarship.  

The life sciences are well advanced in this debate.  For example, in response to numerous studies, codes and guidelines have been developed to assist medical researchers to stay on the path of truth and avoid falling into the abys of advocacy for “big pharma”.

Less advanced is the connection between corporate governance scholarship and industry.  Arguably, the finance industry is to corporate governance what the pharmaceutical industry is to medicine.  And though the latter has been studied exhaustively, the relationship between corporate governance scholarship and the finance industry is still largely unknown.  That said, it would be wishful thinking to believe that corporate governance scholarship is immune from public perception that undisclosed commercial forces could be at play.  

In light of this, I encourage the ICGS to play a leadership role in maintaining and promoting the integrity of corporate governance scholarship by establishing a working group to formulate a code of ethics.  

Though the scope of such a code is beyond this letter, these questions provide a start:

  • Should members avoid "advocating" on behalf of any class of industry participant such as "share owners"?
  • Should members not accept industry funding tied to favorable research findings?
  • Should members disclose the source of their research funding?
  • should members be encouraged to disclose all their research data for peer review?
  • should members commit to the scholars duties?

Sadly, this last issue has all but been reduced to a duty to avoid plagiarism.   It is worth remembering that exactly one hundred years before the ICGS held its inaugural conference in Copenhagen, the American Association of University Professors (‘AAUP’) set down the duties of the scholar:

Since there are no rights without corresponding duties, the considerations heretofore set down with respect to the freedom of the academic teacher entail certain correlative obligations. [...] The liberty of the scholar within the university to set forth his conclusions, be they what they may, is conditioned by their being conclusions gained by a scholar's method and held in a scholar's spirit that is to say, they must be the fruits of competent and patient and sincere inquiry, and they should be set forth with dignity, courtesy, and temperateness of language.

Critically, the AAUP Principles state that the duty is owed to the public.  The scholar’s “duty is to the wider public to which the institution itself is morally amenable”.  

Corporate governance scholars are well known for reminding company directors and officers of their duties and ethics.   In my view, the ICGS will do a great service by reminding its members of their duty and ethics. 



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