The cost of equity capital influences how positive a company's annual report sounds. Companies with higher costs of equity capital tend to manipulate their reports to sound more positive. This manipulation is more pronounced in companies with lower quality accounting information and facing more industry competition. The impact of cost of equity capital on report tone is deliberate. Non-state-owned companies are more affected by this manipulation than state-owned ones. When the cost of equity capital goes up, investor confidence and company value go down. This manipulation is a way for companies to try to maintain their value.