"The misunderstanding is that a company is limited by capital rather than by investment opportunities; and that there is a trade-off between dividends and capital investment. Neither is true," he said.
"For large companies in particular, capital is effectively unlimited, except perhaps during rare times of crisis. At almost all times, debt and equity markets are only too willing to provide capital for good investments. The challenge is to find them."
''At almost all times, debt and equity markets are only too willing to provide capital for good investments. The challenge is to find them.''Wesfarmer chairman Michael Chaney
Instead, Mr Chaney attributed Australian companies' high rate of dividend payout to this country's franking credits policy, saying responsible companies returned those credits to shareholders.
The issue of making capital investments was "entirely separate", he said, with good investments "few and far between".
"The high rate of corporate tax and modest investment allowances in Australia are relevant issues here," he said.
Mr Chaney, a former president of the Business Council of Australia, also referenced the recent debate about whether companies had a purpose beyond providing returns to their shareholders.
"Since we listed on the stock exchange in 1984, our annual report has made very clear the necessity of considering all stakeholders," he said.
"If a company does not maintain that focus, customers will desert it, employees will leave and potential partners will decline to do business with it."
The Perth-based retailer also announced the retirement of non-executive director Tony Howarth, one of the company’s longest-serving board members.
Wesfarmers managing director Rob Scott will be paid $6.75 million for the last financial year after receiving over 85 per cent of his available bonuses.
The company's annual report released on Wednesday showed Mr Scott’s base pay was $2.35 million. That would be boosted by an additional $3.91 million in share-based payments.
Mr Scott’s pay was only slightly up on the $6.55 million he received the year prior, due to changes in the company’s issuance of performance-based incentives following the dermerger of Coles last year.
Coles' current chief executive Steven Cain, who moved across from Metcash to run the supermarket giant, was paid $345,795 for the two month period between September and November 2018 where he was part of Wesfarmers' key management personnel.
Including this amount, Mr Cain's pay will still be less than Mr Scott's as he pockets $5.4 million for his first year at the helm of the retailer, including a $2.4 million transition fee from Wesfarmers to compensate him for his move from Metcash.
However, both chief executives' pay combined will still be less than Woolworths boss Brad Banducci, who's lengthy tenure at Woolworths saw him awarded $6.9 million in long-term incentives, which contributed to a total of $12.6 million in remuneration last financial year.
Bunnings managing director Michael Schneider also pocketed $2 million in share-based payments on top of his $1.39 million salary.