ESG, conflicts of interest, and the accountability of the American Accounting Association

In the last decade, ESG research has become big business.? Well-published academics garner speaking engagements, consulting gigs, board seats, and more.? Can we trust that potential conflicts of interest have not biased published research?? Are potential conflicts disclosed to readers?

Six months ago, I knew of just one case of a possible conflict of interest.? Now, after months of trying to understand that case, I fear that undisclosed conflicts of interest are a systematic problem in the journals of the American Accounting Association (AAA).

In 2021, I stumbled upon evidence that an influential ESG study might be the product of a partnership between an investment company and an author: the CEO of an investment firm testified to this before the US Senate.? Last summer, I discovered that the professor reported to his university that he had indeed received financial compensation from the investment firm.? Yet the published study itself made no mention of the partnership or the potential for a conflict of interest.? Shouldn’t the partnership have been disclosed to readers?

I reached out to the AAA with information on the partnership and suggested that the publication be amended.? They kindly agreed to investigate, and after a couple of months, I received a message that they “did not find any evidence to support that [the author] did not make an appropriate disclosure to [the journal].” ?In a separate email, they told me they “determined that no erratum is warranted”.? When I asked: “hypothetically, what would require an erratum?”, they wrote me that “The authors met all policies at the time.”? I sent them a copy of a AAA “ethics policy” from the period, which included a statement that authors “will disclose any potential conflicts of interest, including funding sources”, and I asked the AAA why this did not apply to the ESG study, but they did not reply.

Whatever the AAA’s policies were “at the time”, after 2018 they were publicly and prominently disclosed on their website.

“Authors are responsible for recognizing and disclosing any conflict of interest that could be perceived to bias their work. Conflict of interest disclosures include, but are not limited to, grants or research funding, employment, affiliations, patents, inventions, honoraria, stock options/ownership, royalties, and consultancies.”?

I wondered what types of conflicts were disclosed under this current policy and asked the AAA for a list of articles that included statements of conflicts of interest, but they declined, citing a lack of “bandwidth to pull all such articles”. ?So, I decided to make my own list by downloading and searching all the acknowledgment sections of all papers, not just ESG, published in the AAA’s premier journal since 2019.? I searched the acknowledgment text of the 529 articles for keywords such as “conflict of interest”, “investments”, “patents”, “honoraria”, and “consultancies”, but my search found no hits.? I then read the text to see if I could spot any clear disclosures. ?I found reports of funding sources (usually to an academic institution), but I did not identify a single transparent report of a conflict of interest.? Finally, I checked with the editor of an AAA journal, who could not recall seeing such a disclosure.

The absence of evident disclosures is striking, but it need not suggest an unenforced policy; it could also indicate that no disclosures were required. ?So, I decided to check into a case where an AAA author was required by his school to disclose publicly any potential conflicts of interest. The author’s school reporting form lists multiple paid advisory positions, partnerships, investments, seats on boards of directors, advisory boards with compensation, honoraria, royalties, and consulting firms founded – one of which had been recently sold.? Yet, the author’s 2022 publication in an AAA journal did not mention any of these.

I sent this new information to the AAA for clarification.? Couldn’t any of these activities be “perceived” as potential sources of bias?? Shouldn’t they have been disclosed?

At first, the AAA seemed to deny the language of their own policy (referenced earlier in italics):

“Thank you for reaching out. Our current disclosure statements do not include the specific language you referenced.”

After I pointed to numerous places on their site where the language appeared, the AAA responded:

“What I meant was our current disclosure statements published on papers do not include that language. We do ask authors to disclose conflicts of interest as described in the policies. You are asking me to attest to disclosures made by specific authors during confidential peer review processes, which I cannot do. I can only repeat that there is no evidence of unethical or improper conduct by any author in regard to disclosures.”?

Their answer baffled me at first, but then I saw a possible explanation.? Maybe the AAA has two policies: a public one that governed disclosure to the AAA, and a second policy that governed when and how the AAA disclosed information to the public. ? When I asked if I was on the right track, the AAA told me the “language may vary between the policy and the published disclosure statement”.? Was that a confirmation of my thinking?? Before I could ask, they told me that due to time pressures, they were “no longer available to answer further questions on this topic.”

So that is the final word from the AAA: they have evaluated its practices and “there is no evidence of unethical or improper conduct by any author in regard to disclosures.”?

It seems to me that the AAA’s main job is to ensure trust in its journals.? After this experience, they have lost my trust.? Based on direct knowledge of two publications on ESG, I no longer trust that their ESG publications are free from conflicts.? ?Based on the fearful manner in which they responded to my inquiries, I don’t think I should trust publications on other topics as well.? It is painful for me to reach this conclusion because I am published in one of their journals.

I hope the American Accounting Association will restore my trust by transparently revealing their policies and by reporting their handling of conflicts of interest in past publications.

Tariq Fancy Auden Schendler Jitendra Aswani Desiree Fixler Michael Lenox Mike Barnett Mike Toffel Alex Edmans Tom Gosling Tom Lyon Florian Heeb Florian Berg Lisa Sachs Bill Baue Laura Marie Edinger-Schons Duncan Austin Luca Berchicci Robert Eccles Ken Pucker Brent Goldfarb David Kirsch Nilanjana Dutt Asli Arikan American Accounting Association Kathryn Kadous Robert Bloomfield Robert Knechel Eddie Riedl Francois Brochet Andrew Jack Henry Tricks