In the wake of the options backdating fiasco, and the scandals that ruined investors in Enron and WorldCom, "corporate governance" became the catchphrase of the new millennium and a whole cottage industry of ratings management was born.

Some evidence supports the notion that those companies with stronger governance have lower risk, increased profitability, and higher valuations. Which means companies with poor corporate governance could be targeted by shareholder activists, hedge funds, or short-sellers. In short, they could be ripe for a fall.

Below, we look at stocks that are marked to underperform the market by investors on Motley Fool CAPS, but sport above-average corporate governance quotients (CGQs). Developed by proxy service Institutional Shareholder Services, a company's CGQ measures how well it performs in up to 63 categories covering four broad areas. Moreover, each company is scored relative to its market index and to its industry group.

Here are five companies that I'm highlighting today:

Company

CAPS Rating

Index CGQ

Industry CGQ

Ambac Financial (NYSE:ABK)

*

94.3%

77.4%

KeyCorp (NYSE:KEY)

*

76.9%

98.4%

PNC Financial Services (NYSE:PNC)

*

57.6%

97.4%

Tenet Healthcare (NYSE:THC)

**

95.2%

99.5%

UAL (NASDAQ:UAUA)

*

95.3%

89.2%

 Source: Yahoo! Finance, Motley Fool CAPS.

Although there are many factors that an investor should consider before buying a stock, how well it treats shareholders shouldn't be least among them. View these rankings as a way to gauge how these businesses stack up against one another relative to their shareholder policies.

Frequent flier
The low cost of oil is pumping new life into airlines these days, even as the number of passengers continues to shrink. This week, United Airlines parent UAL said that the amount taken in for each passenger flown a mile would be essentially flat, with a range of  down 0.9% to up 1.1% for the fourth quarter. The savings from the lower cost of fuel are expected to more than make up for it, though. The stock price of American Airlines parent AMR (NYSE:AMR) also rose.

That's not enough to impress CAPS member tim757pilot, who finds more value in United if it is broken up.

United barely made it out of bankruptcy after 3.5 years. They emerged with a very old fleet and high levels of remaining debt. Their management is one of the most incompetent in the industry. The economy is collapsing, which is going to be very tough on airlines. In the current credit environment, the weakest will not be able to borrow any money to cover their considerable losses. Just like Pan Am before it, United is worth much more today in pieces than as a whole. Look for it to get carved up.

A bank to build on?
Despite avoiding the "epicenter" of the financial market meltdown -- subprime mortgages, consumer credit, and auto loans -- KeyCorp still was forced to cut its dividend to conserve cash while continuing to reduce its exposure to the commercial real estate market. A Citigroup (NYSE:C) analyst approved of the dividend cut and said it's a move that other banks should follow, even if he found it necessary to cut the bank's price target at the same time.

CAPS member DEREK602 writes that Keycorp's lack of exposure to the worst elements of the meltdown means it will ultimately outperform the market.

Key is well capitalized, has excellent sales performance and has very few mortgages on the books. In addition, Key has very limited credit card exposure. Key is a steal at this price!

A Foolish quotient
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Head over to CAPS today and share your thoughts on whether you think these stocks make the grade.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.