The Impact of Effective Leadership on Public Sector’s Financial Instruments: Empirical Evidence from Greece

Abstract

Leadership management refers to leading and managing a team or an organization. It involves developing a vision, setting goals, and providing guidance and support to employees to achieve those goals. Effective leadership management is crucial for organizations to achieve their objectives, as it helps build a positive work environment, encourage innovation, and promote teamwork. Leadership plays a vital role in enhancing the performance of private holding organizations and driving quantitative and qualitative success in a nation’s public sector comprised of a range of services offered to the public. This paper aims to investigate the financial impact of leadership management on the Greek public sector using empirical data and analysis extracted from the dissertation under the title “Leadership and organizational change in the financial decision making in Greek public sector in a time of financial and humanitarian crises”, also written by the paper’s author. The study employs fixed OLS regression and UQR models to examine the effects of leadership on the systematic, idiosyncratic, and total risk as well as the value of the public sector, i.e., governance and corruption levels, during the aftermath of the financial crisis that hit the country between the years 2015 and 2019. Additionally, it explores the potential benefits of team leadership on public services’ quality. The results indicate that leadership demonstrates a statistically significant impact on all public sector risk components. Furthermore, increasing team leadership across public sector divisions may enhance the public sector’s overall value. While verifying the positive impact of leadership on value, and despite the confirmation of a risk-reducing effect of leadership only regarding idiosyncratic risk, this impact appears not only to be of low magnitude but also to account for minor statistical significance.