Excerpted from a blog post by Ray Ducharme, Rave Reps:
And so begins the great debate... Qofmiwok, stated above about not liking the term engineered wood but really both particleboard and plywood are considered engineered wood. We have performed tests on both and found the when subjected to water both materials show some forms of distressing. We took samples of both high and low- grade cabinet quality plywood and particleboard and placed the samples in standing water for four days. Now admittedly this is extreme, if your cabinets were soaking in water for that long you probably had lots more damage to your house than just cabinets.
However, after the soaking the results were startling. All samples showed forms of distressing. Where the plywood delaminated and the particleboard swelled. The lower priced (quality) material did show more distressing than the higher quality materials. The interesting fact was the higher quality particleboard material showed less damage than similarly priced plywood. So you get what you pay for.