Purpose: The present study was conducted with the aim of investigating the moderating role of audit committee characteristics on the relationship between the tone of financial reporting and borrowing costs of companies.

Method: The statistical population of the research is all the companies admitted to the Tehran Stock Exchange in the period of 2013-2022, and 151 companies were analyzed as the final sample of the research.

Results: There is a significant relationship between reporting tone and borrowing cost; financial expertise of the audit committee strengthens the relationship between reporting tone and borrowing cost, the number of audit committee meetings weakens the relationship between reporting tone and borrowing cost, and the number of audit committee members has no significant effect on the relationship between reporting tone and borrowing costs.

Conclusion: Managers may seek to hide the weakness of current and future performance due to opportunistic motives (agency theory) and therefore they use a positive tone and mislead the market and reduce the cost of capital and debt. - Strengthening the relationship between tone and cost of debt by the number of meetings of the audit committee and the financial expertise of the audit committee confirms the rational motivations of managers in line with the market.

Contribution: Few researches have focused on the understanding of managers' tone by investors on the company's information risk and as a result the cost of financing, and there is a research gap in this field. Therefore, the present study aims to investigate the effects of the tone of financial reports.