The boss of Legal & General has backed a call by the Bank of England’s chief economist for companies to invest for the long term instead of paying out cash to feed the short-term demands of shareholders in the City.

Nigel Wilson, the chief executive of one of the biggest investors in the UK stock market, said his investment management arm would take a hard line with bosses who put a higher priority on payouts to shareholders than ensuring the future health of their companies.

In a speech last week, Andy Haldane, the Bank’s top economist, said UK company law gave too much importance to shareholders over other priorities such as employees, suppliers and investment. He said dividends that outpaced profits and companies buying back shares were partly to blame for the economy not fulfilling its potential.

Announcing Legal & General’s first-half results, Wilson said: “I talk to Andy about this a lot. We want people to invest. Dividends are an important part of the return to shareholders. What we don’t want is people overdistributing by share buybacks or overpaying dividends and not investing for the long term.”

Rolls-Royce shares jumped when it announced a £1bn share buyback in June 2014 despite declining financial performance. Warren East, the enginemaker’s new chief executive, scrapped the buyback last month to preserve cash after issuing a profit warning.

Legal & General and nine other investors controlling £10tn of assets have previously written to the chancellor setting out ways to increase long-term investment in research, employee skills and technology as well as pledging to oppose companies that fail to think long term.

In their letter, the investors, which also included Standard Life, Aviva and the fund manager Neil Woodford, said they would oppose unjustified spending cuts, dividend payments and other measures that focused too much on short-term returns. They also singled out share buybacks designed to increase bonuses.

Wilson called for the creation of a “virtuous circle” of more investment, better jobs and higher pay to support the economy. He said British businesses were not ambitious enough and the government needed to do more to encourage exports, despite George Osborne’s vow in 2011 to support the “march of the makers”.

Wilson said: “I think the prime minister and the chancellor have the right intent, but we haven’t built enough export infrastructure to export to Africa, South America and Asia.” Companies need support at trade fairs in those regions that are now dominated by German businesses, he said.

Haldane argued that the shareholder-focused company model common in the UK and the US was not necessarily the best, and that countries such as Germany and Japan gave workers a greater say in the running of a company, including board representation.

But Wilson said he opposed that idea: “I’ve worked in Germany and various parts of the world and British corporate governance, for all its faults, is still the best in the world, but it needs constantly modernising and Andy is right to encourage the debate.”

Legal & General’s first-half operating profit rose 18% to £750m. The company increased its interim dividend by 19% to 3.45p a share.