ESG Governance and Employee Trust in the CEO: Strategic Complementarity in Firm Value

ABSTRACT This study examines whether ESG governance and employee trust in the CEO jointly shape firm value. Using a panel of Korean listed firms from 2019 to 2021, we combine ESG governance evaluations, employee‐review‐based trust indicators, and both market‐based and accounting‐based outcomes. We find that employee trust in the CEO is positively associated with market‐based firm value, and ESG governance is also positively related to valuation. More importantly, the value relevance of employee trust becomes stronger when ESG governance is higher, supporting a strategic complementarity view in which credible formal oversight and internal behavioral credibility reinforce each other. This interaction pattern is most consistently observed in market‐based valuation measures, while the governance main effect and the interaction are weaker and less consistent for ROA. Robustness checks, including lagged specifications, alternative dependent variables, and review‐volume controls, weights, and thresholds, support the stability of the complementarity result. By highlighting the joint role of governance credibility and internal trust, this study extends research on how ESG is translated into firm value and provides multisource panel evidence that combines formal governance evaluations with platform‐based employee signals.