A Harvard Business School professor whose blog posting touched off a plunge in the shares of Internet video and advertising company Blinkx Plc revised his public disclosure at the school’s request to add that he was paid by U.S. investors.
The amended disclosure said that the investment firms’ “position on Blinkx” hadn’t changed since the Jan. 28 blog posting, which elevated the profile of both the company and its critic, Associate Professor of Business Administration Benjamin Edelman.
In the blog, entitled “The Darker Side of Blinkx,” Edelman said his research indicated the London-based company used deceptive software to inflate traffic counts and capture commissions. The stock fell by more than 40 percent after the posting. Edelman’s amended disclosure said his clients’ “primary interest was in learning more about Blinkx’s business, not in assuring I tell others.”
Blinkx “strongly refutes the assertions made and conclusions drawn in the blog post,” it said in a Jan. 30 statement.
The shares rose as much as 10 percent in London trading today, and were up 4.7 percent to 112.3 pence at 11:40 a.m., giving the company a market value of 448 million pounds ($730 million).
Edelman’s initial disclosure said he prepared a portion of the article “at the request of a client that prefers not to be listed by name,” and who let him include the research on his blog. His new disclosure identified the client as two investment companies in the U.S. In an e-mail, Edelman said he did the work for the two investors under one contract, so he considers them a single client.
The professor’s first disclosure “lacked clarity” and didn’t satisfy the “reasonable reader test” -- or giving the consumer enough information to “identify potential conflicts and interpret the work product with appropriate care,” Harvard Business School said in an e-mailed statement.
Harvard’s push for more information demonstrates how universities are adapting their policies to protect the integrity of scholarship as the Internet expands opportunities for faculty to magnify the impact of their work. The policy at Boston-based Harvard Business School, which applies to blog entries, as well as academic articles, was drafted and put into place 18 months ago.
The business school’s conflict-of-interest policy requires that faculty disclose relevant paid and unpaid outside activities related to work available to the public.
“This is new territory and we are learning as we go -- building case law, providing positive examples as best practices, using outside feedback to determine where we are falling short,” Brian Kenny, Harvard’s chief marketing and communications officer, said in the e-mail. “Our objectives have been clear from the start: we hope to avoid anything that would discredit the faculty’s scholarly work.”
In an interview, Edelman, 33, said he had received many questions about the disclosure and that it should have been more precisely worded.
“I appreciate their pointing out that the disclosure could have been better, and I was happy to revise it,” Edelman said of the business school. “Obviously, I wish I had chosen better wording. I certainly expect to spend more time on the disclosure next time around.”
The latest disclosure, dated Feb. 4 and 5, says that Edelman performed the research in December and January for the U.S. investors and that his agreement didn’t “oblige me to circulate my findings.”
“The client tells me that it did not change its position on Blinkx after reading my article,” the statement reads. Edelman, whose scholarly research focuses on the Internet, has a history of exposing questionable advertising practices, including at Zango Inc., an Internet advertising company.
In 2006, after Edelman wrote about Zango, the company agreed to pay $3 million to settle a Federal Trade Commission complaint that it used unfair and deceptive methods to put advertising software on consumers’ computers. Blinkx is using Zango’s software, Edelman said in his blog post.
In his e-mail, Harvard’s Kenny said Edelman “has been thoughtful about raising questions related to his outside activities throughout his time at HBS” and has “put care into crafting a disclosure intended to satisfy the school’s policy.” Harvard supports Edelman’s efforts to expose questionable activities on the Internet, Kenny said in an interview.
“It’s important to note this isn’t inconsistent with his line of work,” Kenny said. “He’s written controversial things about Google and Microsoft and other industry giants. He sees it very much as his area of interest and appreciates being able to research something he feels isn’t right and expose it.”