This study examines earnings management behavior by US-listed commercial banks during the Sarbanes-Oxley Act. We employ two different measures in order to study earnings management, the frequency of small reported net income, and the difference between discretionary securities gains and losses and loan loss provisions. We find that high-performance banks, well-capitalized banks and high-leveraged banks are to a great extent prone to earnings management. We also find that banks with high growth opportunities and banks audited by one of the Big-Four auditing companies do not engage in earnings management.
