Suppose that an analyst conducts a study about the firms that have been acquired by other firms. The analyst finds that many firms’ being acquired by other firms were preceded by the acquired firms’ selling their subsidiaries, which action is called “divestiture.” Based on the finding, the analyst concludes that a firm’s divestiture causes the firm’s being acquired by other firms. 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.’

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The conclusion reached by the study suggest that sel... View the full answer