Quote Originally Posted by Shambles
I always Murder My prizoners in droves, Untill the Enemy begins to rout,
Seems to reduce there morrale,
And makes others frightend of my generals,
Killing prisoners has no battlefield effect as far as I know, but it does give your general a "bloodthirsty" vice that increases dread but lowers the morale of your own troops (because they won't get a ransom). Dread has no effect whatsoever on the battlefield.

I tend not to kill prisoners because I like to role-play. Also, I often need the cash. Enemies of my faith or Mongols are excepted from this rule, however.