I've done a lot of work in this area (including quais-rigorous experimentation with hiring pipeline processes) and I have found that live coding challenges are anti-correlated with good hires. I was surprised by this as I quite like them.
What people like us, who do like them, don't realize is how much stress it puts on people who don't like them. This stress does not usually have any real world correlation with the job you are hiring for, so it severely biases against candidates who would be great but fail due to stress. It also biases towards people who can come up with glib fast solutions, which also frequently isn't correlated with being able to solve long complex problems.
What people like us, who do like them, don't realize is how much stress it puts on people who don't like them. This stress does not usually have any real world correlation with the job you are hiring for, so it severely biases against candidates who would be great but fail due to stress. It also biases towards people who can come up with glib fast solutions, which also frequently isn't correlated with being able to solve long complex problems.