The title reaction is investigated in detail theoretically using density functional theory. After 5-endo-dig cyclization by nucleophilic attack, five possible pathways are taken into account in this work: direct ring expansion followed or accompanied by proton-transfer (paths A and B, respectively), 1,3-cationic migration (path C), proton-transfer before ring expansion (path D), and processing via a gold-nitrene (path E). Results indicate that the reaction would undergo the favored sequential pathway (path A) rather than other pathways. Moreover, the concerted mechanism (path B), which is designed to account for the selectivity of product in the experiment, would be unlikely in the reaction. The selectivity of product could be explained by the hindrance of ligand (t-BuXPhos) and the stability of the carbocation. Moreover, the binding energy of product complexes could account for the observed reaction rate.