This study examines the value relevance of goodwill. It is held as thesis for the Master's Division of Banking and Financial Management at the University of Piraeus. Furthermore it explores the value relevance of impairment tests in contrast with the value relevance of goodwill amortizations. It estimates the impact of purchased goodwill and of its impairment on stock price for UK, German and French firms in the years 1997-2010. It confirms previous studies that purchased goodwill is value- relevant in the year of acquisition but it fades thereafter and that amortization is value-irrelevant for each country. By contrast with amortization it finds that impairment is value relevant only for UK.