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Rejecting the Marie Antoinette Paradigm of Prejudgment Interest

Posted: 14 Jan 2005  

Royce de Rohan Barondes

University of Missouri-Columbia School of Law

Abstract

This paper examines principles for properly computing prejudgment interest by examining the impact on different corporate constituencies. This paper concludes that prejudgment interest at a promisor's cost of funds can undercompensate promisees, by shifting value from the promisee's equityholders to its creditors through a forced investment that decreases the risk of the promisee's portfolio of assets.

Keywords: prejudgment interest, corporate constituencies

JEL Classification: K41, K12

Suggested Citation

Barondes, Royce de Rohan, Rejecting the Marie Antoinette Paradigm of Prejudgment Interest. Brandeis Law Journal, Vol. 43, p. 1, 2004; U of Missouri-Columbia School of Law Legal Studies Research Paper No. 2006-01; CORI Working Paper No. 2004-12. Available at SSRN: https://ssrn.com/abstract=596142

Royce De Rohan Barondes (Contact Author)

University of Missouri-Columbia School of Law ( email )

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