Posted: 14 Jan 2005
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: 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