Relationship between a firm sales revenue

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Suppose that an analyst conducts a study about the relationship between a firm's sales revenue and the size of the firm's acquisition of real estate properties, by examining the data from 200 corporations with annual sales revenue exceeding $200 million. The analyst finds that the more a firm spends for acquiring real estate properties, the more revenue the firm generates in subsequent years. Based on the finding, the analyst concludes that an acquisition of real estate property causes an increase in a firm's revenue. Someone else who is not involved in the study, however, argues that the conclusion has a problem of 'reversed causality.' Provide a possible reason why study's conclusion could have a problem of 'reversed causality.'

Reference no: EM132503359

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