The focus of this study is to improve understanding of the incentives underlying a particular type of off-balance sheet financing: the non-consolidation of finance subsidiaries. We examine a sample of French firms that had finance subsidiaries during the 1990-1997 period. More than 32% of these firms did not consolidate their finance subsidiaries during the period studied. This contrasts with Anglo-American countries where established GAAP have eliminated the non-consolidation option. The direct consequence of not consolidating these highly leveraged subsidiaries is the reduction of debt-to-capital ratios. As suggested by economic theory, results show that firms are less likely to consolidate their finance subsidiaries the higher their level of indebtedness, the larger their size, the greater their ownership concentration and the larger the extent of their credit activities. The predictable results support the moves to limit exception to consolidation and to increase disclosure with respect to off-balance sheet activities.