The purpose of this paper is to provide empirical evidence on the relationship between accounting eamings and stock prices in the Spanish capital market. The literature published to date in this area has generally ignored the fact that there are several altenative rnodels which may be applied to analyze the earnings-price relationship, and that each functional fonn is based on certain economic foundations which must be analyzed in depth. The results we haved obtained by using al1 the functional specifications considered in our study confinn the findings reported by previous research undertaken in other countries.

Key words: accounting earnings, capital market.