The paper examines how investor attention affects earnings management decisions. Our key conjecture is that institutional investors are subject to attention constraints. These constraints impede them from exerting equal monitoring intensity for all firms in which they invest simultaneously. At a given point in time, institutional investors may become distracted shareholders, in the sense that they shift their attention to other parts of their portfolio and loosen their monitoring intensity. We follow Kempf et al. (2017) and use a firm-level proxy for investor distraction, which captures when institutional investors experience shocks in unrelated parts of their portfolios. We find strong evidence that managers take advantage of shareholder distraction to engage in earnings management. We document a significant impact on both discretionary accruals and real activities manipulation. We argue this effect is causal because the distraction measure captures shifts in investor attention caused by shocks in unrelated industries. Further, we show that the presence of other monitoring forces such as analyst coverage and leverage diminishes this effect. Our results are consistent with the idea that earnings management is difficult to detect (Kothari et al. 2015) and without continuous and stringent monitoring, managers have more discretion to engage in earnings management.