Since 2010 the initiation of margin trading and short selling in China, research on the implementation effect of this trading mechanism has been deepened. However, there is little literature concerning such problems as how debtors will view this trading mechanism. From the perspective of creditors, this paper first analyzes the change of creditor’s demand for accounting conservatism after the initiation of short-selling mechanism, and then explores the solution to this problem based on a multi-period difference-in-differences model by using the quasi natural experimental environment from which the first initiation of margin trading and short selling derives. The results show that the initiation of short selling promotes target firms to adopt more conservative accounting policy, and which is more pronounced in companies with higher debt level. Furthermore, this paper finds that the increase of accounting conservatism is positively related to the short selling trading. And the short term debt ratio of target firms significantly increases, but the long debt ratio decreases after the initiation of short selling. These findings suggest that the creditors need debtors to adopt more conservative accounting policy to deal with the risks brought by short selling.