Abstract: Enterprise external financing structure mainly depends on the subjective initiative of management team, while management team′s initiative is necessarily affected by the objective financing risk which can cause entrenchment motive from the loss of their own interests and positions to be replaced. Based on the theory of GONE, the study analyzes the impact mechanism that how the management team entrenchment influences enterprise external financing structure, empirically analyzes the internal relations between management entrenchment strength and enterprise external financing structure by taking listed companies in China as cases, and examines the effect of equity incentive on the relationship between the management entrenchment strength and enterprise external financing structure. Research finds that management team entrenchment is the main influence factor of enterprise external financing structure, and equity incentive can weaken adverse effects of management team entrenchment on enterprise external financing structure, playing a regulatory role in raising the debt financing ratio and a downward adjustment role in equity financing ratio and long-term debt ratio. Therefore, enterprise should pay attention to using equity incentive to adjust the relationship between management team entrenchment and the preference of external financing structure. The research conclusion can provide reference for enterprise financing structure design, and weakening management team entrenchment intensity to form a reasonable financing structure.

Key words: management team entrenchment, external financing structure, equity incentive, GONE Theory