Some things you should know about the datatypes (un)signed short and char:
char is an 8-bit value, thats what you where looking for for lsb and msb. short is 16 bits in length.
You should also not store signed values in unsigned ones execpt you know what you are doing.
You can take a look at the two's complement. It describes the representation of negative values (for integers, not for floating-point values) in C/C++ and many other programming languages.
There are multiple versions of making your own two's complement:
int a;
// setting a
a = -a; // Clean version. Easier to understand and read. Use this one.
a = (~a)+1; // The arithmetical version. Does the same, but takes more steps.
// Don't use the last one unless you need it!
// It can be 'optimized away' by the compiler.
stdint.h (with inttypes.h) is more for the purpose of having exact lengths for your variable. If you really need a variable to have a specific byte-length you should use that (here you need it).
You should everythime use datatypes which fit your needs the best. Your code should therefore look like this:
signed char lsb; // signed 8-bit value
signed char msb; // signed 8-bit value
signed short combined = msb << 8 | (lsb & 0xFF); // signed 16-bit value
or like this:
#include <stdint.h>
int8_t lsb; // signed 8-bit value
int8_t msb; // signed 8-bit value
int_16_t combined = msb << 8 | (lsb & 0xFF); // signed 16-bit value
For the last one the compiler will use signed 8/16-bit values everytime regardless what length int has on your platform. Wikipedia got some nice explanation of the int8_t and int16_t datatypes (and all the other datatypes).
btw: cppreference.com is useful for looking up the ANSI C standards and other things that are worth to know about C/C++.