[nuclearnice1]

Why does it persist?

I can think of three non-exclusive possibilities:

* Market power of banks

* Corruption of the stock-compensated managers who benefit from the pop

* Genuine or perceived benefit to the company in further price raising. (Mentioned above)

[lmm]

There's an (also non-exclusive) argument that it's a fair price for the risk that IPO buyers are taking. IPOs do "fail" sometimes, so the pop isn't as great a risk-adjusted return as it looks.