I will often ask candidates to write down a few lines off code on a white board, or a piece of paper, but in those cases, I usually don't really care about the details of the code, as I will ask them to explain what they are doing.
But I wasn't getting the impression that was the kind of coding being referred to by the OP. I've heard from other companies giving coding tasks that exceed the size of a whiteboard - but I've never heard of any research done about the value of this. We've discussed this at our company (that is, giving potential hires a coding task), but we're rejected it; the cost of creating a task that's representative of the work we are doing is just too great. (And since we get in lots of candidates, we'd need to cycle between tasks, as people do pass around the questions that have been asked). We care more about people fitting in the development methodology than about their exact level of Perl coding (which can be trained).
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