Luis Palencia
professor
Accounting and Control
IESE Business School Universidad de Navarra
Spain
Biography
Luis Palencia is professor in the Department of Accounting and Control. Prof. Palencia holds a degree in civil engineering from the Universidad de Cantabria, Spain. He completed his MBA at IESE in 1989, and upon graduation worked for three years in the project management section of the engineering group, Bechtel. One of his assignments involved supervising the works carried out by the construction division of the Barcelona 1992 Organizing Olympic Committee. He joined IESE's faculty in 1992, teaching managerial accounting and analysis of business problems. He obtained his Ph.D. in accounting from the University of California at Berkeley in 1999. His research interests are primarily focused on the area of business valuation using accounting measures, and the effects of the accounting regime on accounting-based valuation models. He is also interested in analysis of profitability and financial diagnosis. Prof. Palencia teaches the courses "Analysis of Business Problems" and "Managerial Accounting," which both feature in IESE's MBA, executive education and doctoral programs. In addition, he has taught at the Haas School of Business Administration while working on his Ph.D., and has been visiting professor at Instituto Internacional San Telmo and the Lagos Business School. Since 1993, Prof. Palencia has participated in a number of consulting projects, most of which have concerned business valuation, an area in which he has developed business models for Internet start-ups, software companies and transportation companies. He has also designed and implemented cost systems for industrial companies.
Research Interest
Areas of Interest * Cost systems and financial information * Accounting based valuation models * Financial statement analysis
Publications
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The author refers to non-operative or operable problems, those for which there is no protocolized sequence of actions to solve them. These problems constitute the essence of the manager's task, that is, making decisions to avoid unwanted effects, with incomplete information and being forced to make concessions where the only certainty is usually that "there is no optimal solution." The article proposes a diagnostic model, search for alternatives and criteria, analysis, synthesis and formulation of an action plan. The article recreates the process that follows when making a decision, going deeper into the characteristics of each stage that coincides precisely with the diagnosis, the generation of alternatives, the identification of limits, the analysis, the choice of a solution and its implementation.
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Improving business management brings together some of the best business cases prepared by IESE Business School. The fourteen experiences described in it allow the reader to simulate decision making in different sectors and areas of the company; from the choice of a growth market to the definition of strategies for new competitors, or the management of people in multicultural environments. The book is a guide for you to discover and analyze for yourself the uncertainties surrounding business decision making. To read it should be equipped with pencil and paper, but also the rigor, imagination and responsibility of the decision maker in the company. Although exercise can be tiring, learning is guaranteed. Who said that making decisions was easy?
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Accounting-based valuation models use accounting numbers (earnings and book values) to infer the value of ongoing businesses (as a whole or on a per share basis). The most common accounting valuation model is the Discounted Residual Income model. Although this model is, in theory, insensitive to the accounting regime, the necessary truncation through terminal values leaves it dependent on the accounting. This monograph studies the effect of the accounting regime on the accuracy of the residual income model. It first characterizes the concept of accounting conservatism (through an index) and, second, analyzes the interaction among the drivers of residual income: profitability and growth in assets. The results show how the parameters capturing the evolution of profitability and growth vary with the level of conservatism and also that valuation models that account for that interaction are more accurate than models with continuing values estimated under simpler assumptions.
