In March 2010, the China Securities Regulatory Commission (CSRC) launched a reform introducing both margin trading and short selling into China’s stock market. This paper examines the impact of this reform on corporate outcomes in the short run and long run. In our analysis, we adopt a generalized propensity score (GPS) matching method that allows treatment effects to change over time. Our empirical results not only indicate that the reform positively bolstered stock trading activities, but also constrained managers’ behavior, such as their method of earnings management. We think that disclosure policies adopted by managers can influence stock trading activities. This study has several important implications that policymakers might find useful. We provide evidence supporting the CSRC to allow more firms to join the reform.