European companies are under mounting pressure to come clean about overpriced acquisitions after regulators found that losses taken on past deals were suspiciously low.
In a warning shot ahead of the release of 2012 results by many companies, the pan-European securities regulator on Monday questioned why weak economic conditions had not caused heavier writedowns.
Steven Maijoor, chairman of the European Securities and Markets Authority, said he feared that listed companies were taking an excessively optimistic view of the value of takeovers agreed in more buoyant times.
"Issuers tend to be slow in recognising losses," he said. "Economic circumstances have changed fundamentally in the past years and that needs to be reflected."
The concern follows a pioneering Esma survey of goodwill impairments at a sample of 235 listed European companies carrying significant amounts of goodwill.
Goodwill is the asset created when the price of an acquisition exceeds the value of the target's net identifiable assets.
At listed EU companies, it must undergo an "impairment test" once a year to see if its value has decreased. Deteriorating economic conditions can trigger writedowns by reducing the cash flows that assets are expected to generate.
Having held 790 billion euros of goodwill at the start of 2011, the companies surveyed by Esma suffered 40 billion of impairment losses during the course of the year.