           This work is licensed under the Creative Commons Attribution 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by/3.0/ 103 The Use of Reported Cash Flows versus Earnings to Predict Cash Flows: Preliminary Evidence from Qatar Helmi Hammami Assistant Professor of Accounting Department of Accounting and Information Systems, College of Business and Economics, Qatar University. e-mail: helmi.hammami@qu.edu.qa Received September 13, 2012 / revised October 12 / accepted October 13 / published online October 14, 2012. DOI: 10.7350/BSR.A10.2012 – URL: http://dx.medra.org/10.7350/BSR.A10.2012 ABSTRACT The study aims to empirically investigate the predictive ability of reported cash flows versus earnings to predict future cash flows in a market situated in a high growth rate economy such as Qatar. The sample of the study consists of companies on the Doha Securities Market (Qatar Exchange) for the period 2004-09. Qatar is a very interesting context to explore especially after the quick reputation it is gaining at the international scene. We provide evidence on the ability of earnings and cash flow measures to forecast one period or two-period ahead cash flows. However, the results support the superiority of cash flows over earnings in predicting future cash flows. Furthermore, with the exception of CFOP, our research model reports that CFFIA and CFFA are better predictors of themselves. NIDPR – A traditional cash flow measure is a good predictor of CFOP. Finally empirical findings show that cash flow measures and earnings are not correlated suggesting the specificities of each are different. Keywords: Cash flows, Earnings, Accruals, Qatar, Emerging Markets. 1. INTRODUCTION Firms’ ability to generate cash flows is an important component in any investment decision. Future cash flows directly affect the value of securities, because they constitute the ultimate payoff expected from the investment and hence, they are a crucial input for financial valuation models (Gilchrist & Himmelberg, 1995). The conceptual frameworks of the Financial Accounting Standard Board (FASB) and the International Accounting Standard Board (IASB) stress the ultimate objective of accounting as to provide investors with quality information 1 to predict future cash flows. The debate on the relation of cash to earnings roots back to the early years of the twentieth century. The concept of funds statement has existed since then in the United States of America 1 Qualitative characteristics of financial information are divided into fundamental ones and enhancing ones. The fundamental characteristics are: relevance and faithful representation. The enhancing qualities are: comparability, verifiability, timeliness, understandability.