Growing stakeholders’ awareness of corporate philanthropy requires the firms to shift their focus from profit and shareholder wealth to philanthropic activities. This study intended to examine the effect of firm donation (DON) on corporate financial performance. This study robustly examined the financial performance using ROA, ROE, Tobin’s Q, and Cash Holdings. The data on the firm’s donation and financial data were gathered from the Refinitiv Eikon database. This study considers all listed firms in the main and ACE markets from 2018–2023. Due to the non-disclosure of donations, the final sample of this study comprises 363 firm-year observations. Using unbalanced panel data, the results found that DON is positively significant in ROA, Tobin’s Q, and Cash Holding, except for ROE. Our findings reveal that firm donation significantly improves financial performance among listed firms in Malaysia. This study contributes to the new findings on the DON on FP using current data. The study is significant to investors, who should be concerned about the way how the firms give back to society via the firm’s donation.