This study investigates the wealth effects of open market stock repurchases on shareholders and bondholders and tests the relative importance of the signaling hypothesis and wealth transfer hypothesis regarding the motivation of stock repurchases. The empirical results show that the CAR around the announcement of share repurchases is 2.70%, while the YSC (Yield Spread Change) is -0.13%, which implies that both values of stocks and bonds increase at repurchase announcements. In addition, the correlation between the shareholder's wealth and the bondholder's wealth is positive only in the firms with speculative-grade debt. However, considering that both shareholders' and bondholders' wealth increase even in the firms with investment-grade debt, the signaling hypothesis seems more persuasive than the wealth transfer hypothesis.