It’s Starting: Disclosure of ‘Trump Risk’
They’re here, they’re here! The first corporate filings that cite the incoming Trump Administration as a potential risk factor!
The winner is TPI Composites, a Rhode Island-based manufacturer of components for wind power generation. TPI filed its third-quarter report at 4:41 p.m. on Wednesday, Nov. 9. Fourteen minutes later came the quarterly report for Adeptus Health, a healthcare company that operates emergency rooms in Texas and Colorado.
Both companies included mention of Donald Trump’s election victory the night before in their discussion of risk factors. Both also viewed Trump’s election as a negative.
TPI warned that Trump’s promises to curb clean-power initiatives could undercut demand for its products. The company named the Production Tax Credit for Renewable Energy and the Clean Power Program, both of which might be vulnerable under a Trump Administration and Republican Congress. The exact language:
If President-elect Trump and/or the United States Congress take action or publicly speak out about the need to eliminate or further reduce the PTC, the Clean Power Plan or other legislation, regulations and incentives supporting wind energy, such actions may result in a decrease in demand for wind energy in the United States and other geographical markets and may materially harm our business, financial condition and results of operations.
Meanwhile, Adeptus warned that the looming repeal or reform of Obamacare (formally known as the Patient Protection and Affordable Care Act, or PPACA) will mean something for company, even if it doesn’t know exactly what:
It is possible that following the inauguration of President-elect Trump on January 20, 2017, legislation will be introduced and passed by the Republican-controlled Congress repealing the PPACA in whole or in part and signed into law by President Trump, consistent with statements made by him during his presidential campaign indicating his intention to do so within a short time following his inauguration … we cannot quantify or predict with any certainty the likely impact of the PPACA or its repeal on our business model, prospects, financial condition or results of operations.
Regardless of whom you supported in the presidential election, life goes on—as do corporate filings. The looming Trump Administration portends significant change across a wide swath of our economy, and public filers will need to say something about it in their disclosure of risk factors. TPI and Adeptus are only the first of many.
I found their disclosures at Calcbench in its Footnotes database. (Disclosure of my own: I provide some paid editorial services to Calcbench.) Dozens more companies already listed the presidential election as a risk factor in quarterly filings from earlier this year, without citing Trump or Hillary Clinton by name. Usually the disclosure appears in the same breath as risks from Brexit over in the United Kingdom. And as always, the disclosures are rather vague speculation about changes to trade policy, energy regulation, financial regulation, and other concerns. Nothing terribly specific.
Nevertheless, the Trump Administration is here, so it’s only natural that corporate reporting acknowledges the fact. I’ll keep tabs on Trump disclosure in the future, and expect a lot more discussion of the man and his policies by three months from now, as fourth-quarter 2016 reports get filed.
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