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Once a year, companies are required to test Goodwill for impairment by comparing a reporting unit's fair value (for public companies, this is generally taken to be the market value) with its carrying value (book value). So if that market value drops considerably, market value may fall below book value, triggering a potential writedown.
As such, you are likely to see a number of companies write down their Goodwill when the market turns south. Individual companies that see their share prices hammered are also likely to have to write down their Goodwill accounts. For example, SuperValu has seen massive share price declines in recent years, which have led to massive Goodwill writedowns, which in turn may have led to further share price declines, which would have led to more Goodwill writedowns in a virtuous cycle.
Of course, in an efficient market, shareholders wouldn't react to Goodwill writedowns, recognizing that they do not affect cash flow and are only occurring because of previous share price reductions. But we know that in real life, shareholders do focus on earnings, which is why, for example, managers fought so hard to keep stock options from being recognized as expenses for the purposes of EPS. Indeed, sticking with the SuperValu example, consider this article on the company following its third quarter release, which focused on SuperValu's losses without even mentioning the $450 million writedown that was the cause of the losses! (The article instead blames high food costs, a cautious consumer, and turnaround costs for the losses!)
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