Audit quality enhances the reliability of financial statements to the financial statement users and minimizes information asymmetry. The previous literature supports information risk mitigation by audit quality, which is linked to the cost of capital. The current study aims to evaluate the impact of auditor independence on the cost of capital, while also assessing the role of family ownership as a moderating variable. Auditor independence is proxied by non-audit fees, the cost of capital is proxied as WACC, and family ownership is measured as a family holding at least 5% of total ownership. A total of 294 non-financial companies listed on the PSX were considered for the period from 2014 to 2023, resulting in 2,940 observations. The GMM technique was used to evaluate the association between auditor independence and cost of capital, with the moderating role of family ownership. The empirical findings of the current study indicate that non-audit fees and family ownership are significantly linked with COD, COE, and WACC. The final result of the present study plays a significant role in understanding the importance of auditor independence to the cost of capital. The present study aims to highlight the significance of auditor independence in relation to the WACC, to facilitate the adoption of positive policies by investors, top management of financial and non-financial institutions, policymakers, and regulatory bodies, and ultimately benefit all stakeholders.