Foundations of Finance: Tribal Members are Shareholders



An organizational analysis that compares a smaller company to a larger company can create new opportunities for change and growth. Creating economic growth in “Indian Country” or tribal reservations rely on business profits generated by various business ventures, usually undertaken by the tribal government. Indian reservations were formed to disperse land claims funds and the Hannahville Indian Community was one of those reservations. On June 27, 1936, duly adopted by a vote of 41 for, and none against in an election in which over 30 percent of those entitled to vote cast their ballots in accordance with section 16 of the Indian Reorganization Act of June 18,1934, (48 Stat. 984), as amended by the Act of June,15, 1935 (49 Stat. 378). Judgment funds were held in trust by the United States, including interest and investment income accruing on such funds, and judgment funds made available for programs or distributed to members of the Wisconsin Band of Potawatomi (Hannahville Indian Community and Forest County Potawatomi) (Public Law 100-581). In order to claim these land claims money tribes created governments who then in turn created business corporations through charters issued by the newly formed government. The Hannahville Indian Community was formed in 1936 and then formed a corporate organization with the same name. Pursuant to section 17 of the Act of June 18, 1934 (48 Stat, 984), the Charter was issued on August 13, 1937, by the Assistant Secretary of the Interior to the Wisconsin Potawatomie of the Hannahville Indian Community, Harris-Wilson, Michigan, and was duly submitted for ratification to the adult members of the Community and was on August 21, 1937 duly adopted by a vote of 42 for, and none against.  With the adoption of the corporate charter Hannahville could now legally enter into contracts with other legal entities.

 Legal forms of business are reaching new global markets as corporate giants like Walt Disney World expand their stockholder’s wealth.  A business-like Walt Disney World has many common stockholders to keep informed throughout the world. Unlike a public corporation like Walt Disney Company. tribal organizations such as the Hannahville Indian Community are corporations chartered specifically by the federal government. Like Walt Disney Company some tribal organizations pay dividends or per cap payments to the tribal membership who are considered the legal owners of the tribal corporation. This study will compare organizational business structures and how corporate governance and reporting is practiced in each corporate entity.

The Shareholder

Corporations have a long history in the US economy. Corporations are an entity that legally functions separate and apart from the owners (Author J. Keown, 2017).  The shareholder in corporate structures adhere to certain ideals that promote the interest of shareholders in a business structure. The shareholder is the provider of equity in which businesses are formed to provide the equity needed for asset investment. For example, Walt Disney Company’s top five shareholders are also part of the governance board for the firm. According to Investopedia Bob Iger, Chairman and CEO owns 1.018 million shares, Christine McCarthy, the CFO holds 131,139 shares, making her the company’s second-largest individual shareholder. Alan Braverman, the Disney general counsel, holds 98,922 shares of the company. With 86,140 shares. Aylwin B. Lewis is the company’s fourth-largest individual shareholder. Robert W. Mattschull is the fifth-largest shareholder of Disney with 71,360 shares (Maverick, 2019). The information about the corporate governance and its ties to large shareholders is easily found.  When we examine tribal members, who are the investors, we find that there is only one share, and this belongs to the tribal council and its executive officers board. This sounds like a good working relationship overall but presents issues for tribal members as investors and stockholders of the organization’s resources and assets. Reporting standards made to stockholders, in our case, tribal members, are controlled by entity Corporate governance just like Walt Disney Company but has no measure of the equity for individual tribal members. The CEO board, which is a tribally chartered governance board are also the primary government officials for the tribal council who issues and grants charters. The tribe also utilizes a Section 17 corporation status to create bond issues for large construction projects. This type of corporation is easier to work with as it can be sue and be sued. The charter for a section 17 is issued by the US Secretary of Interior which allows the corporation to have only one share. This seems to be a huge advantage for governing officials who have remained in control for almost thirty years. There are no waivers of sovereign immunity issues because section 17 owns and manages the one controlling share of all tribal businesses. Without the proper controls the shareholder has no value to the executive management in the tribal corporation.

Importance of Knowledge

Corporate governance has become increasingly more important since the bank bailouts in 2008 due to scandals that included many companies, with Enron being the most memorable. Similar situations arise in the course of managing resources for tribal members. The Cobell Vs. Salazar settlement exposed mismanagement of Individual Indian Money accounts. There were about 300,000 account holders and the suit award 1.5 billion in 2010 (Echohawk, 2019). Both issues present the principal-agency problem. Principle five of Finance says: Conflicts of Interest Cause Agency Problems (Author J. Keown, 2017). The concept of free cash flows is a valuable tool to be able to understand how managers “use” cash and how conflicts can happen. This is evident in the disapproval of very highly compensated CEO’s who benefit from salaries and other business perks.  Cash flows are an important aspect of financial management and it is very important that tribal council and its corporate structure never fall short of evaluating performance from a cash flow perspective. Tribal Governments and the US Congress have specialized powers to reduce the shareholder to only one share and represented by a board the tribal governments construct to manage resources for economic development. When preparing to control the agency costs managerial finance and the use of financial statements for corporations is critical in meeting business objectives while creating wealth and value for the shareholder or tribal member. Training and development in financial administration would help introduce new ways to control spending costs in tribal administration and business management.

Previous observations of tribal council meetings involving fiancé decisions did not include a Cash flow analysis as most information was presented by Income statement performance or a projected budget. This can be misleading for top decision makers because they are not really viewing a true picture of cash flows and how they are created. Debt structure has been able to create growth and maintain operational expenses during slow seasons. Tribal members have been used to other managing their accounts as we saw in the Cobell case but often managers are not providing information on how to evaluate finances. How do tribes allow their tribal members to become competitive market players? Through proper evaluation techniques that allow them to make sound decisions about how to invest its resources or create debt to improve economic conditions with out taking on too much risk. Even if tribal members want to make riskier investments the opportunity is not available with the current business structure.

Even when “Indian reservations do have valuable economic resources, these resources either go undeveloped or are developed by outside, non-Indian promoters with only minimal economic return to the tribe and its members in the form of rentals or royalties.”23 H.R. REP. NO. 93-907 (1974), as reprinted in 1974 U.S.C.C.A.N. 2873, 2874, 1974 WL 11451.

As we compared a small organization, a federally chartered corporation to a larger, public company we can identify much more with the importance of maintaining proper and informative reports that can provide information to make a financial analysis. Although Walt Disney Company has global reach it has used technology to keep its shareholders well informed of their activities. In contrast finding financial information about the Hannahville Indian Community is cumbersome. If tribal members want to be able to evaluate the community and its businesses the proper financial documents need to be provided so voting members will have a better idea how to manage cash while maintaining high ethical standards. These include creating more opportunity and wealth for the average tribal members as the original investors.

Final Thoughts

In conclusion shareholders in US Corporations expect the value of their investment to increase and to know how the capital structure is being funded. Walt Disney Company is an example to follow as they are the entertainment giant to the world. The Hannahville Indian Community is also in the entertainment business and is heavily reliant on a steady stream of customers. When new capital projects are being considered there is no way for a tribal member to influence the outcome with shares they own in the company. Unlike Bob Iger, CEO of Walt Disney Company, who owns over 1 million shares of stock that gives him huge advantage as a voting shareholder. Recently Tribal members opposed an investment in a new golf course and a tribal survey revealed that almost 80% of the registered voters in the community did not think it was a very good investment. If the tribal business structure were more transparent and improved the governance of the corporation then other voting rights and property right could be extended to the tribal member. Creating tribally or government owned business is not promoting individual membership inclusion in the decision process as they have not voting rights about resource allocations or there is no way to sell equity in the tribal organization as it is all owned by one board controlled by the tribal government. More exposure to training and development in financial administration while improve the chances that members can influence the outcome of cash flow and create an environment that adheres the first principle in Finance: Cash flow is what matters. If members can evaluate finances using more than income statements, then their chances to control principal-agent problems that create unnecessary expenses and demand using assets properly.


Author J. Keown, J. D. (2017). Foundations of Finance: The Logic and Practice of Financial Management. New York: Peason Education, Inc.

Echohawk, J. E. (2019). Individual Indian Money (IIM) Accounts – Cobell v. Salazar. Retrieved from NARF:

Maverick, J. (2019, October 3). The Top Five Disney Individual Shareholders (DIS). Retrieved from Investopedia:

Thompson, H. D. (2018, October 19). GreenburgTraurig. Retrieved from Competitive Advantages of Doing Business with Native American Tribes & Tribal Corporations:

Walt Disney World. (2019). About: Walt Disney World. Retrieved from Walt Disney World:

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