The impact on the finances of companies being shorted is not discussed. Understandably so, since a company is either solvent (assets >= liabilities) or insolvent (assets < liabilities). Its stock price has nothing to do with it. In fact, if short-sellers drive the stock price low enough, the company might find that it makes sense to buy back its own stock. Other companies might see this as an opportunity for a takeover. Why was it that no corporation wanted to buy Bear Stearns, Lehman or AIG? Because they were insolvent - you could sell off all the assets without being able to pay off all their debts. They were basically a money pit.
Budweiser had no problem selling itself off to Inbev - in fact it had to fight its suitor off before succumbing to a better offer. Sandisk has had no problem trying to get acquired - it never even asked and Samsung came calling. Short sellers don't sell good companies - they sell bad companies, hopefully at the high, before anyone else figures out they're bad companies. But good or bad, a company's solvency isn't affected by its stock price, any more than your solvency can be affected by your neighbors' opinion of you.
“Short sellers don’t sell good companies - they sell bad companies, hopefully at the high, before anyone else figures out they’re bad companies.”
This is fine if it is based on public information and not “insider” information. I will never believe that most of the hedge funds operate on public information until I see some real proof.