Grounding and shielding between isolated devices
Ideally you'd like the shield to be:
1) The same voltage throughout the shield, unchanging with time
2) No current flowing on the shield.   

This means that in most cases, tying the shield to two points will usually induce a current to flow on the shield, which can couple to the senor wire inside through mutual inductance. In short, usually tying shields in two places induces currents, don't do it.


  is connecting the battery negative to the motorbike chassis good or
  bad?


As long as the shield doesn't touch anything else, this would be a good point to tie it to. 


  presumably, when the cable shield is connected to the battery
  negative, I do not need a separate negative carrying wire inside the
  cable as the shield can be used for that purpose - is it true?


Usually not a good idea if there are sensitive signals on the inside because current should not flow on the shield. Best to use the negative wire on the inside to carry the current.