Joan Massons, ESADE professor and renowned financial advisor, enters as full academician of the RAED

Joan Massons, doctor in Business Administration and Management, professor of Finance and Financial Planning at the ESADE Business School and a renowned financial advisor, entered as full academician of the Royal European Academy of Doctors-Barcelona 1914 (RAED) during a ceremony held on January 29 in the Assembly Hall of Catalan Labour National Work Development, headquarters of the RAED. The recipient read the admission speech Paradigmas financieros en tela de juicio (Financial paradigms in question). Full academician José María Gay de Liébana answered on behalf of the Royal Corporation.

In his work, the new academician questions and invalidates in a reasonable way some of the indicators of reference in business analysis and audit such as ebitda, the ROCE ratio, the ebitda/interest or ebitda/sales ratios, the self-sustaining growth rate (SGR) or the WACC index. With concrete and didactic examples, the academician dismantles the rigor of these mechanisms as usual as -he considered- deceptive.

“Four years ago I presented at the Spanish Association of Economists, a conference entitled “Ratios que mienten” (Ratios that lie). “I exposed my criticism to certain economic indicators waiting for the reaction and response of experts and I found unanimous assent to my criticisms and discovered that the suspicion of certain economic indicators was not new, but that many professionals resigned themselves to using dubious ratios, because otherwise they could be criticized for not using all the tools at their disposal”, argues the author in the presentation of his study.

For Massons, the indicators and analysis models of the business economy analysed “say absolutely nothing about the health and soundness of the company. Not only that, in some cases they can even say exactly the opposite of what is really happening in a company”, he says.

Admission speech