Since the revision of the Company Law in 2018, the regulatory authorities have strongly supported listed companies in repurchasing stocks, with the intention of making listed companies the backbone for maintaining stock market stability. However, some domestic media and investors believe that share repurchases will result in a transfer of wealth from bondholders to shareholders. To this end, the paper introduces the idea of asset value decomposition into the Merton model, demonstrates the mechanism by which share repurchases affect the interests of bondholders, and uses the data from Chinese listed companies to test the research propositions. The study found that after a listed company announced a share repurchase plan, bond prices, overall, showed a significant positive reaction. At the same time, default risk has been significantly reduced, and operating performance has also been remarkedly improved. It is further found that corporate bonds are more responsive to share repurchases than mediumterm notes and shortterm financing bonds, and the bond market reacts more positively to share buybacks by listed companies conducted for equity incentives and employee stock ownership plans. In addition, the paper finds that the positive signaling effect of share repurchase is not limited to the bond market but can also extend to commercial credit, banks, and other financial institutions, significantly improving the company’s access to commercial credit and reducing the overall financing cost. The paper not only enriches the relevant literature on share repurchase but also provides a policy basis for the supervision of share repurchases.