Plywood (wood) warps. Now that is a fact, and most people already know that. But, some people do NOT know what to do to stop this from happening. One thing to know is that when Luan Wood is exposed to moisture, or to water, it tends to warp and discolour.
Another thing to watch out for is when laying the plywood, so that it is well attached around the edges and the centre. This is to ensure that you install everything evenly. Using a glue, with screw, combination is probably the best method of avoiding your plywood to warp. That's from what I have found out, by using it myself.
Glue the panels down with a good adhesive mixture, and either nail or screw in to secure and fasten the wood pieces (plywood) into place, just like you would with regular panels of plywood or Luan wood. To make sure your hold is very secure, you should aim to nail out about every 24 inches and about 16 inches from the centre.
Luan Wood Video Series
Bending Luan Wood Video
Installing Luan Wood Video
Cutting and Installing Vinyl Over Luan
Installing Luan Over Subfloor
Laying laminate over Subfloor
Making Tile Flush With Subfloor
Attaching Luan To Subfloor
Working With Luan For Do It Yourselfers
Another way of avoiding your Luan wood to warp
When screwing the Luan plywood, be sure it is well secure. Also, be careful with screwing. Then, pull right through the wood. The Luan plywood must be coated, otherwise you risk that it will turn out to be a blotchy type of wood. You will need at least 1 coat primer and at least 2 coats paint. Luan would be a good choice if you plan on it being a temporary wall covering. By that, I mean you want to put bead-board on the walls, but right now you can't afford to. So you could deal with Luan, paint it and later go over it with bead-board (panel adhesive and use tiny nail brads) when you have the money. Primed Luan also makes a good base for wallpaper.