Between shareholder-friendly stocks expected to underperform the market, and highfliers that pay little heed to their owners' interests, you'll find top-flight companies that also treat their shareholders with respect.

Institutional Shareholder Services -- the big name in corporate proxies -- measures how well a company performs in as many as 63 categories covering four broad areas. Moreover, each company is scored relative to its market index and its industry group. ISS assigns the stocks a rating that it calls its corporate governance quotient, or CGQ.

Some evidence supports the notion that companies with weaker governance have higher risk, decreased profitability, and lower valuations. We'll be looking at stocks that Motley Fool CAPS investors have marked to outperform the market, and which also sport above-average CGQ scores, either in their index group or among industry peers.

Company

CAPS Rating (out of 5)

Index CGQ Ranking*

Industry CGQ Ranking*

Amylin Pharmaceuticals (NASDAQ:AMLN)

****

93%

94.1%

E*TRADE Financial (NASDAQ:ETFC)

****

67.6%

92.6%

Huntsman (NYSE:HUN)

*****

83.7%

67.4%

Take-Two Interactive (NASDAQ:TTWO)

****

85.9%

94%

Western Refining (NYSE:WNR)

****

58%

54%

Sources: Yahoo! Finance, Motley Fool CAPS.
*Relative placement when compared with companies in index or industry. Higher is better.

Although finding good companies and holding them for the long term is one of the greatest secrets to success in investing, there are many other elements an investor should consider. How well a company treats its shareholders shouldn't be least among them. Consider these rankings a way to gauge how these businesses stack up against one another relative to their shareholder policies.

Go to the head of the class
When a company is going through a major restructuring, as E*TRADE Financial is, it's not unexpected to report losses for extended periods of time. Good thing, since the discount broker posted its ninth consecutive quarterly loss yesterday. The encouraging sign from the news is that the loss was narrower than anticipated. However, management's assertion that it will steal market share from rivals is perhaps a bit too exuberant, particularly when you compare E*TRADE to the performance of TD AMERITRADE (NASDAQ:AMTD).

TD AMERITRADE also reported declining profits that were off less than analysts predicted, but it also built up a better than $1 billion war chest from which it expects to make an acquisition, buy back shares, or fund a dividend for shareholders.

Getting left back
The mortgage industry debacle seriously impaired E*TRADE's operations, forcing the company to spend considerable time rebuilding itself. Things are turning around, though, as evidenced by E*TRADE's ability to raise $147 million in net proceeds last month through a common stock offering, in order to shore up the capital base. It also completed a $1.7 billion debt swap the month before.

The brokerage's improving financial situation, coupled with TD AMERITRADE's interest in making an acquisition, just might lead the wags to resurrect a buyout rumor again. Of course, TD AMERITRADE consumed thinkorswim earlier this year, so it may not want to tackle another big project just yet -- especially one still fraught with risk.

Charles Schwab (NASDAQ:SCHW), though, might want to take the plunge to expand its offerings. Schwab's net new client accounts are up 41% from last year, but clients are cautious about investing new money, as a 4% drop in trading revenues demonstrates. Bringing in E*TRADE's base might just help.

CAPS members are also anticipating something on the merger front. oghowie says with the threat of bankruptcy past, momentum for a buyout is now in place. ivjf212 votes for Schwab to make the move.

Should E*TRADE go it alone, or would a bigger partner be the better option? Invest a minute of your time and let us know on E*TRADE's CAPS page.

A Foolish quotient
Many factors go into whether a stock is a buy or a sell. Do corporate governance policies enter into your equation? 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.

Take-Two Interactive Software is a Motley Fool Rule Breakers recommendation. Charles Schwab is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of Huntsman, but he holds no financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool's disclosure policy is a capital idea.