This study investigated the effects of firm characteristics (external investment and co-CEO structures), managerial characteristics (CEO’s experience and age), and COVID-19 on earnings management in small- and medium-sized enterprises (SMEs). Examining the data of 18,873 Korean SMEs between 2015 and 2020, this study determined the factors influencing discretionary accruals in SMEs. Discretionary accruals were estimated using firms’ financial statements, and the effects of firm and CEO characteristics on the magnitude of the absolute value of discretionary accruals were estimated using random effects panel regression models. The results revealed that SMEs with co-CEO structures (vs. those with single-CEO structures), those led by more experienced CEOs (vs. those with less experienced CEOs), and those led by older CEOs (vs. those with younger CEOs) engage in less earnings management. Conversely, SMEs with external investors engage in greater earnings management than those without external investors. The results also showed that SMEs engaged in less earnings management during the COVID-19 period than during non-COVID-19 periods. Overall, this study is significant because it focuses on SMEs, a group often overlooked in earnings management research, and provides empirical evidence of how COVID-19, a global economic shock, influenced SMEs’ earnings management practices.