Peñalva, Fernando

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  The Conservative Bias in Asset Fair Value Measurements

Badia, Marc; Duro, Miguel; Peñalva, Fernando; Ryan, Stephen Yes, there's a bias in the fair value measurements of financial assets, this research shows. But it's not the bias you might expect. Read article

  The Benefits of Recording Losses First

García Lara, J.M.; García Osma, B.; Peñalva, Fernando Conservatism on financial statements is useful for investors, according to research by J.M. García Lara, Beatriz García Osma and Fernando Peñalva of IESE. Analyzing U.S. stock data over three decades, the authors conclude that conservative accounting practices lead to better information for stockholders. Read article

  A Renewed Interest in Conservative Accounting

García Lara, J.M.; García Osma, B.; Peñalva, Fernando Business leaders are looking for ways to get the economy moving toward profitability, job creation and growth. A new article suggests that embracing conditional conservatism would be a step in the right direction, enabling companies to lower their cost of capital and reduce uncertainty. Read article

  Final Hurdles for Universal Accounting Standards

Peñalva, Fernando

As financial markets become more international, the need to harmonize financial reporting standards around the world grows more urgent. Companies, investors and potential investors stand to benefit. This is the idea behind the International Accounting Standards (IAS) introduced in the EU in 2005 and since renamed International Financial Reporting Standards, or IFRS. Yet, in the United States, the U.S. GAAP still prevail. This will change when the convergence currently under negotiation by the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) concludes. Until then, there is a lot to be learned by comparing the two standards, as IESE Professor Fernando Peñalva does in the article "Principales diferencias entre las NIIF y las U.S. GAAP" ("Main Differences Between IFRS and U.S. GAAP").

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  Why Do CEOs Get Paid More Under Weak Governance?

Dávila, Antonio; Peñalva, Fernando

Evidence shows that weak corporate governance is associated with poor firm performance and higher levels of CEO compensation, as well as asymmetric rewards. In this case, CEOs are compensated for favorable but uncontrollable events, yet they are not penalized for unfavorable occurrences. How is this possible? How do CEOs exert their power to modify their compensation contracts and to make additional money? Professors Antonio Dávila of Stanford University and Fernando Peñalva of IESE Business School examine whether the implicit weights on various performance measures relevant to the design of CEO contracts vary across governance structures. They find that, as governance deteriorates, CEOs exert their bargaining power to design their compensation contracts so that more weight is put on accounting-based measures of performance than on stock-based performance measures.

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  Do Stock Options Improve Company Performance?

Hillegeist, Stephen A.; Peñalva, Fernando The use of stock options as an incentive for employees has caused turmoil in recent years. The business press has called executive compensation "excessive," "out-of-control" and "harmful to shareholders." Yet, more companies continue to offer more options - and not just to CEOs and top executives. Stock options are also trickling down the organizational ladder to lower-level employees. But here's the key question: Do stock options actually improve company performance? In the document "Stock Option Incentives and Firm Performance", IESE Professor Fernando Peñalva and Stephen A. Hillegeist, from the Kellogg School of Management, conclude so. Read article

  Understanding Enron´s Downfall

Peñalva, Fernando

In just four months, Enron´s market value plummeted from $38 billion to zero. This case study explains - step by step - the scandalous downward spiral of what was o­nce the world´s largest energy-trading company.

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