Decomposition of Cash Flows and Prediction of Future Cash Flows

Recent studies provide evidence that aggregated cash flows and accrual components persist differently from aggregated cash flows or accruals in predicting future cash flows. We examine the role of cash flow components in predicting future cash flows beyond that of accrual components for Tehran Stock Exchange (TSE) listed firms during 1379-1386. We find that core and non-core cash flows defined in our paper enhance the in-sample predictive ability of cash flow prediction models, but these are not differentially persistent in predicting future cash flows.