Investor sentiment is recognized as one of the key factors in financial decision-making, influencing asset pricing and market volatility. This sentiment, which includes irrational optimism or pessimism toward companies’ stocks, can lead to deviations of market prices from their intrinsic values. Studies indicate that investor sentiment is influenced not only by fundamental factors but also by psychological and behavioral variables. One of these factors is Key Audit Matters (KAMs). KAMs, as part of the auditor’s report, provide information about significant audit risks that may affect investors’ judgments. Investors’ reactions to these matters may reflect their level of confidence in the transparency and reliability of financial information. Therefore, this study aims to examine the impact of KAMs on investor sentiment in companies listed on the Tehran Stock Exchange. To achieve this objective, a research hypothesis was developed. A sample consisting of 119 companies listed on the Tehran Stock Exchange during the period 2019–2023 was selected to test the hypothesis. A multiple regression model based on panel data was employed for hypothesis testing. The findings indicate that KAMs have a positive and significant effect on investor sentiment. This result suggests that transparent disclosure of KAMs enhances investor confidence and positive perceptions, thereby significantly strengthening investors’ sentiment and trust.