Conflict of Interest Policies and Information Efficiency

Where conflicts of interest exist for professionals, difficult decisions must be made regarding when conflicts of interest should be allowed, while being disclosed, monitored, and managed. At other times, the conflicts need to be eliminated or avoided. Current trends in practice trend towards the elimination of conflicts of interest, partly as a response to extensive publicity over some very questionable activities when individuals clearly had conflicts of interest. In many instances the public interest is best served when conflicts of interest are clearly avoided, public trust is reinforced, and there is not even the appearance of impropriety. Yet at times conflicts of interest are better managed than avoided, especially when the potential interests of all stakeholders are considered. When new rules governing conflicts of interest are developed, the primary emphasis is typically on the implications for the principal organization writing the rules, and the public perception of this organization. The interests of the employees of this organization, to whom the rules are applied, are also considered. With much less frequency, the implications of conflict of interest rules on other stakeholders are considered. The position taken in this paper is that the interests of multiple stakeholders should be considered when conflict of interest policies are developed.